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Bosses Can’t Afford Minimum Wage Under Labour, FSB Warns

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Bosses Can't Afford Minimum Wage Under Labour, FSB Warns

Rising employment costs are forcing thousands of owner-managers to absorb the bill themselves, squeezing profits, pensions and hiring alike

Surging employment costs and a run of above-inflation increases in the minimum wage have left many small business owners unable to pay themselves a living wage, one of the country’s leading business groups has warned.

The Federation of Small Businesses (FSB) cautioned that thousands of owner-managers are being drawn into a downward spiral of higher costs and shrinking profits that threatens their ability to draw even the most basic income from their firms.

In a submission to the Low Pay Commission (LPC), the independent body that advises ministers on the minimum wage, the FSB said bosses were increasingly forced to cover rising pay and compliance costs out of their own pockets. The pressure, it argued, is fast becoming a permanent feature of the labour market, pushing more proprietors either to close their doors or to make choices that will damage their own retirement.

“It is becoming a major structural issue within small firms where the costs of employment, including the national living wage, employer National Insurance contributions and auto-enrolment, make it harder for a small business owner to make sufficient profit to pay themselves a living wage, let alone to fund a pension,” the submission said.

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“This has a negative double effect: fewer roles created and sustained in small businesses, but also fewer small businesses that are economically viable. In effect, this is leading to fewer jobs and fewer small firms.”

The warning chimes with the FSB’s own recent survey data, which showed rising wage costs dragging small business confidence into negative territory as labour became the single biggest barrier to growth. The federation said just 11 per cent of its members would be unaffected by another above-inflation rise in the wage floor.

The national living wage currently requires workers aged 21 and over to be paid £12.71 an hour, while those aged 18 to 20 must receive £10.85. The LPC signalled in March that it was minded to recommend an increase of up to 5 per cent for the national living wage in 2027, with a central estimate of £13.18 representing an above-inflation rise of 3.7 per cent.

The FSB was not alone in sounding the alarm. The Institute of Directors (IoD) used its own submission to urge the LPC to direct the Government to rethink Labour’s manifesto pledge to pay all workers, regardless of age, the same minimum wage. It blamed the recent surge in youth unemployment squarely on policies that have deterred employers from taking on less experienced staff.

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“If the Government is serious about tackling the youth employment crisis, it must address the crisis in the cost of youth employment,” the IoD warned.

The institute argued that Labour’s pledge to scrap the youth rate of the minimum wage risked making matters worse, and called on ministers to postpone further increases until employment among young people had recovered to pre-pandemic levels. The minimum wage for younger workers has risen by more than a quarter under Labour, a move that economists, including policymakers at the Bank of England, say has deepened a youth unemployment crisis that has seen the number of young people not in education, employment or training climb towards one million.

A survey by the Recruitment and Employment Confederation found that a quarter of employers would scale back hiring if the wage floor rose to the levels under discussion, which it said pointed to “a potential tipping point for employment decisions”.

“These dynamics are having tangible labour market consequences,” it said. “Entry-level opportunities are being constrained, working hours are being reduced in some sectors, and the impacts are falling disproportionately on young people and labour market entrants, particularly those already at risk of becoming or remaining not in education, employment or training.”

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The IoD urged Labour to move away from a scheme that pays employers up to £3,000 to take on young people who are out of work, and instead to pivot towards broader measures aimed at bringing down the overall cost of employment. “Small, one-off incentives tied to significant amounts of bureaucracy will not come close to offsetting the increased costs of employing people brought about by recent Government employment policy,” it said.

Lower minimum wage rates for younger workers have existed since the system was introduced by Labour in 1999. The IoD pressed the LPC and the Government to reconsider plans to scrap what it had described as “discriminatory” age bands until employment among under-24s rises back above the 60 per cent level seen before lockdown.

“The LPC should recommend that the Government pauses the implementation of the equalisation of the youth and main minimum wage rates,” it said. “As described above, the equalisation is having a damaging impact on youth employment prospects at a time when the number of Neets has exceeded one million.” The concern is consistent with wider forecasts that youth unemployment could climb to 17.8 per cent by 2027 as artificial intelligence and tax rises bite into entry-level hiring.

For its part, the FSB called on Labour to increase automatically a small business tax break in line with future minimum wage rises, ensuring that firms with fewer than four employees are left no worse off.

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A government spokesman said Labour’s minimum and living wage increases had left Britain’s lowest earners £900 better off.


Jamie Young

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

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Prince William, Kate Held “Crisis Talks” After Harry and Meghan’s Highgrove Meeting With King, Report Says

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Prince Charles, Kate Middleton and Prince William

Prince William and Catherine, Princess of Wales, reportedly held private “crisis talks” after learning that King Charles III had met with Prince Harry and Meghan Markle at Highgrove House earlier this summer, according to a report published in Woman magazine citing unnamed palace sources.

Royal correspondent Emily Andrews, writing in the magazine, said sources close to the palace described William and Kate as feeling “betrayed and possibly even humiliated” by the king’s decision to meet privately with the Duke and Duchess of Sussex. According to Andrews, the reaction stemmed in part from what the couple views as a long pattern of public criticism directed at the royal family by Harry and Meghan in the years since their 2020 departure from official duties. “They have been humiliated on more than one occasion by both Prince Harry and Meghan Markle, and seeing them swan back to the UK must, I’m sure, sting,” Andrews wrote.

The Highgrove meeting, which took place at the king’s private Gloucestershire residence and Harry’s childhood home, reportedly lasted only a couple of hours, according to the report, potentially just long enough for Harry and Meghan’s children, Archie, 7, and Lilibet, 5, to play in a treehouse King Charles had originally built for William when he was a child. Buckingham Palace confirmed the visit within hours after it occurred, though the palace did not release additional details or a photograph from the gathering, according to the report.

Andrews characterized the palace’s swift, if limited, public confirmation of the meeting as signaling a broader shift in approach toward the Sussexes. “It appeared to announce a policy of appeasement to the Sussexes,” Andrews wrote, adding that despite criticism the couple has directed at British institutions, including the judiciary, the government and the monarchy itself, “they will not be cast out.”

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According to the report, William is believed to have urged his father not to meet with Harry and Meghan, reflecting the future king’s continued frustration over his brother’s public criticism of the family through a series of high-profile media appearances, including an interview with Oprah Winfrey, the Netflix documentary series “Harry & Meghan,” and Harry’s 2023 memoir, “Spare.” Andrews wrote that William believes the couple should not have been rewarded with a family meeting with the king, however private, given that history. “His father has gone ahead, while William is the one carrying an ever-growing share of the actual work and popularity of the monarchy,” Andrews wrote, framing the dynamic as one in which William feels he has shouldered institutional responsibilities that Harry stepped away from.

Andrews argued that the king’s willingness to meet with the Sussexes represents a departure from the approach taken by his mother, Queen Elizabeth II, who died in 2022. “Charles’ first duty is not to the spare. It is to the heir and his wife. That is the deal Queen Elizabeth II understood and honoured for 70 years: the institution comes first, sentiment a distant second,” Andrews wrote, characterizing the Highgrove meeting overall as “a triumph for Harry and Meghan.”

The report also suggested the meeting may represent the culmination of an 18-month effort by Harry and Meghan to re-establish themselves within both Britain and the royal family, a strategy Andrews suggested could ultimately benefit the couple’s public profile and business ventures if it leads to more frequent visits to the UK going forward. Andrews wrote that a pattern of regular return visits would effectively unravel the terms of the couple’s 2020 departure from royal duties, often referred to as “Megxit,” describing any such arrangement as “the half-in/half-out that the late Queen explicitly forbade.”

Despite their reported frustration, Andrews wrote that William and Kate have limited options for influencing the situation directly. “What can William and Kate do? Not much, if we’re honest, until William is King,” Andrews wrote, adding that William rarely discusses Harry within royal circles but that the king’s decision to meet with the Sussexes “is sure to sting.”

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The report also highlighted an apparent shift in the palace’s public messaging around the visit. According to Andrews, palace officials had described Harry’s earlier refusal to bring his children to the UK without enhanced security arrangements as “emotional blackmail” just three weeks before the Highgrove meeting took place, a characterization Andrews said changed noticeably in tone following the reunion. A source close to the king, cited in the report, said Charles “will never shut the door on the possibility of spending time with his family because, despite all the trouble, blood is blood.”

Andrews wrote that significant mistrust remains between the Sussexes and Buckingham Palace despite the Highgrove meeting, and that while Harry appeared eager to use his recent UK visit to repair family relationships alongside his other engagements, his relationship with William and Kate specifically remains severely strained. “It’s also clear that Kate and William will not forgive him for Spare,” Andrews wrote, concluding that while the couple remains united with each other, “their relationship with Harry and Meghan seems to be broken forever.”

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Amalgamate banks – The Economic Times

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ET Search
This refers to your edit ‘India needs new banks’ (ET, Mar 4). Financial inclusion and financial literacy will be the paramount objective while implementing reforms along with UID project to protect the interests of poor. Modern banking system has lost apersonal touch. Even citizens from semi-urban areas are reluctant to use ATMs. NextGen banking may fail in rural areas. It’s true we need more banks and innovative way of thinking, competition will drive away inefficient players.

ET has also suggested the perfect solution to the problem in the same edition, ‘Before they compete, let banks consolidate’. Narasimhan panel too has suggested to have less number of banks with more branches at the national level. The author has pointed out that of 9,000 private bank branches, just 1,138 are located in rural areas. This means they are not keen to go rural.

Shishir Sindekar,

Nasik, March 4

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Prysmian S.p.A. (PRYMY) Q2 2026 Earnings Call Transcript

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OneWater Marine Inc. (ONEW) Q1 2026 Earnings Call Transcript